Mercado Bitcoin reports 78% of election-day volume driven by companies using stablecoins to hedge currency risk

This surge occurred as businesses sought to hedge currency risks while conventional financial markets were closed.

Mercado Bitcoin reported that the volume for USDT, a dollar-pegged stablecoin, increased by nearly 800% compared to the preceding Sunday. Concurrently, Bitcoin volume experienced an 865% surge, according to the exchange.

The Ibovespa index declined by 14% on Monday, marking its worst day since 2020. This downturn followed the result where incumbent Luiz Inácio Lula da Silva defeated Flávio Bolsonaro, a candidate that prediction markets had favored with roughly an 80% probability.

Pedro Fontes, a research analyst at Mercado Bitcoin, stated in an analysis shared with CoinDesk, "For investors, this reinforces the logic of not relying only on the real." He further noted, "In this scenario of higher exchange rate pressure, stablecoins, such as USDT and USDC, are a simple way to dollarize part of your assets, at any time and starting from low amounts."

The increased fiscal pressure stemming from Lula’s platform, which includes greater social spending and a ban on online betting reducing tax income, fueled concerns about the nation's finances. This added pressure on the real and sustained high borrowing costs.

Data tracked by Biscoint, which monitors 10 venues including Binance and MB, showed that USDT turnover against the real rose 150% from the prior Sunday. USDC turnover jumped 318%. By Monday, combined USDT and USDC turnover reached 1.84 billion reais ($350 million), which is 65% higher than the previous week.

On Binance, Bitcoin turnover against the real increased by 370%, while the global BTC/USDT pair saw a 25% decline. Bitcoin gained 9.4% against the real but fell 0.2% against USDT, reflecting a repricing of the Brazilian currency as market participants reacted to the election.

Market participants had previously priced Bolsonaro's victory at 84% on Kalshi in an October 24 preview, even as the platform noted polling indicated a tight contest. Einar Knobel, CEO and co-founder of TxODDS, commented in an emailed statement to CoinDesk that, regarding prediction markets, "I would not read this as a failure of prediction markets. The mechanism did what it is designed to do with the information it was given."

The significant activity underscores a trend where institutional participants are utilizing crypto assets to manage exposure amid political uncertainty affecting domestic financial stability.

Why it matters

This event highlights how institutional actors are using stablecoins to manage currency risk amid political uncertainty in Brazil. The sharp movements in crypto volumes and traditional markets underscore the growing role of digital assets in hedging against sovereign risk. Regulators and exchanges are closely watching how these corporate hedging strategies evolve.